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Lesson #3, Assignment #2

# Lesson #3, Assignment #2 - Student Name Class Problem 5-16...

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Student Name: Class: Problem 5-16 FRANKEL LTD. Analysis of Expenses Cost of goods sold Variable Shipping expense Mixed Advertising expense Fixed Salaries and commissions Mixed Insurance expense Fixed Depreciation expense Fixed Analysis of the mixed expenses: Shipping Salaries & Units Expense Comm. Exp. High level of activity 4,500 56,000 £143,000 Low level of activity 3,000 44,000 107,000 Change 1,500 12,000 £36,000 Correct! Correct! Correct! Variable cost element: Change Change Variable in Cost in Activity Rate Shipping expense £12,000 1,500 £8 Salaries and commission expense £36,000 1,500 £24 Fixed cost element: Shipping Salaries & Expense Comm. Exp. Cost at high level of activity £56,000 £143,000 Less variable cost element 36,000 108,000 £20,000 £35,000 Correct! Correct! The cost formulas are: Shipping expense £20,000 + £8X. Salaries and commission expense £35,000 + £24X FRANKEL LTD. Income Statement For the Month Ended June 30 British Pounds Sales in units 4,500 Sales revenue £630,000 Variable expenses: Cost of goods sold £252,000 Shipping expense 36,000 Salaries & comm. expense

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